2 0 2 0 J U N E
MAREI MID-AMERICA ASSOCIATION OF REAL ESTATE INVESTORS
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EDUCATION
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what's coming up 09
June 9th, MAREI Meeting Creative Deal Structuring in a Chaotic Market with Bill Cook. All who register receive handouts and replay. Virtual.
13
May 13 Deal Maker's Seminar Bill Cook's famous Deal Maker Seminar is coming to MAREI. This is a full day of creative deal making. Includes detailed workbook & replay of the event. Virtual.
14
July 14th, MAREI Meeting There will be a MAREI meeting July 14th. It may be virtual and then again it may be a live event on the 14th and & Virtual event on the 15th. Watch the calendar for details. See MAREI.org/Calendar for more events across the Kansas City Metro from the local landlord groups and events hosted by MAREI Members.
MAREI Staff Chapter
Executive Director
Kim Tucker: Kim@MAREI.org - 913-815-0111
Newsletter
Staff: Newsletter@MAREI.org - 913-815-0111
PartnerCast Legal
John Wires: JohnWires@gmail.com Julie Anderson-Clark: Julie@MOKSLaw.com Rick Davis: RDavis@LevyCraig.com
Membership in National REIA provides our members with
Mission Statement
Community Advocacy Education Discounts at the National Level
Legal Disclaimer
Mid-America Association of Real Estate Investors is a trade association dedicated to promoting ethical real estate investing and to protect and promote the best interest of our membership through educational and networking opportunities as well as community, legislative and public relations.
MAREI does not exist to renter and does not give legal, tax, economic or investment advice and disclaims all liability for the actions or inactions taken or not as a result of communications from or to its members, directors, contractors and volunteers. Each individual should consult his/her own counsel, accountant and other advisors as to legal, tax, economic, investment and related matters concerting their business.
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Content Disclaimer The views and opinions expressed by authors of articles contributed to this newsletter do not necessarily reflect those of the association, the director, or the staff.
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M A R E I
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L E A D E R S H I P
Are You An Ender?
This term popped up again in videos from Bill Cook (this months speaker). Because I invested for 15 years and never got the term, I thought we should take a moment and explain what it means. Keep in mind that terms come and go based over time, but I really think they all mean about the same thing. Let’s start with some terms or acronyms you may have heard and work out way from there. BRRRR: Buy, Renovate, Rent, Refinance, Repeat. This was a term made popular by Bigger Pockets and its a fancy way of saying, acquire rental property for cash flow, get it cash flowing, get permanent financing on it, and then go buy another one. The goal of the BRRRR method over time is to build up your portfolio of cash flowing properties over time.
And F.I.R.E. stands for “Financial Independence, Retire Early.” The goal is to save and invest very aggressively—somewhere between 50–75% of your income—so you can retire sometime in your 30s or 40s. Using it in real estate, you are building up your portfolio of cash flowing rentals and at the same time working to pay off debt, so you can retire early.
To me, an Ender seems to be a person who has learned how to invest in real estate and create cash flows from different sources, maybe in BRRRR, but maybe also in other ways of acquiring rentals, or lending money, buying notes, or some other form of residual income. They put in the time and effort to get that cash flow coming in and with just a little management on their part, it keeps coming in. Then they can step back and enjoy life,“Do What Matters” as we heard from Coach Carson at last month’s MAREI Meeting. Yes, Coach Carson is an Ender.
But I was still not convinced I had it right, I reached out to Bill Cook, after all he’s where I first heard the term way back in 2015, to get his break down. Here’s what he shared:
Starter: less than 5 deals, just getting started and figuring things out.
Estate Builder: Realized that flipping and wholesaling are never-ending J-O-B-S. Estate Builders seek financial freedom. This occurs when your capital assets are working for you rather than you working for your capital assets.
Ender. An Ender has achieved his/her goal of financial freedom. Everything he/she needs financially is provided for in the guise of mailbox money: rents, notes, options, stocks, etc. It’s not to say Enders quit doing deals, far from it. It’s more of a case that they don’t have to do any more deals.
As my husband Don and I flip a lot of houses, it seems we are still in the Estate Building phase. We do have quite a few cash flow projects going in the form of notes and I also have affiliate programs online. But those will eventually run out as the notes get paid off and need to be replaced, or consumers of the affiliate product stop consuming. I would like to be an Ender in the next 3 to 5 years, that’s one of the reasons why I scheduled Bill Cook to join us while planning back at the end of 2019. Then we had Corona Virus and it seems that funding for investors, while not totally gone has become much harder and knowing just a few of Bill’s strategies is going to be vital to all of us in the next couple of years. So are you an ender? Do you want to be one? I do! Kim Tucker Co-Founder of MAREI
ARE YOU AN 'ENDER'? DO YOU WANT TO BE?
There are a lot of real estate terms you learn over the years, and I thought after 15 years I knew most of them. but back in 2015 when I went on a cruise, I kept hearing people talk about being an “Ender” and that was a totally new term to me.
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M A R E I
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G E T T I N G
S T A R T E D
The most powerful document in real estate investing is the option agreement. Sadly, the least used and most misunderstood document in real estate also happens to be the option agreement. Why don’t more folks know how to effectively use options to control property? Probably because there are so few investors who have experience using options.
Me Being a Nimrod B Y
B I L L
C O O K
I hate being an idiot, but when you screw up like I just did, it qualifies me to be the biggest nimrod in the land! The most powerful document in real estate investing is the option agreement. Sadly, the least used and most misunderstood document in real estate also happens to be the option agreement. Why don’t more folks know how to effectively use options to control property? Probably because there are so few investors who have experience using options. Most folks have heard of Lease Options, but what about Purchase Options, Performance Options and First Right of Refusal Options, to name but a few?
An option is a right, but it’s not an obligation. Let me explain: If you’re selling your house and we sign a Purchase and Sale contract, I’m contractually obligated to buy your property and you’re contractually obligated to sell me your property. If either one of us refuses to perform, there’s a fair chance attorneys may get hired – cha-ching! On the other hand, if I buy a Purchase Option from you, it gives me the right to buy your property for the agreed-to price and terms…but you can’t force me to perform! However, you ARE obligated to sell me your property for the agreed-to price and terms, if I choose to exercise my option.
Think about it: Doesn’t using an Option to control a property sound a whole lot safer than using a Purchase and Sale contract? Let’s get back to me being a nimrod. In 2010, Kim and I bought a threebedroom, two-bath home on Hamilton Crossing in Cartersville, Georgia for $2,100. The home needed a huge rehab. We sold it a few weeks later for about $18,000 and gave owner financing with monthly payments of $375 per month. The buyer was an experienced contractor who planned to rehab and then move into the home. After the new owner finished the rehab, the home’s FMV (fair market value)
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C O O K
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T H E
O P T I O N
An option is a right, but it’s not an obligation. increased to $40,000! (Remember 2010) Fast forward to 2015. The homeowner fought the law and the law won. He was then forced to relocate to an eight-bytwelve foot jail cell. This caused him to quickly fall behind on his home payments. Before we could foreclose, he sold his property for $17,000 and paid off the mortgage we were holding. Question: What if I had had the right to buy this $40,000 property back from the seller for the seller’s $17,000 asking price? Wouldn’t that have been a smart business move? Welcome to the world of First Right of Refusal Options. Normally, when Kim and I sell a property, as part of the terms of the sale, we get a First Right of Refusal Option from the buyer.
This means that if the new owner ever decides to sell his home, whatever price and terms he and his buyer agree to, the seller must first ask us if we’d like to step into the agreement (as buyer) that he and his potential buyer worked out. If we say yes, we buy according to that price and those terms. If we say no, the seller sells to his buyer, no muss and no fuss, and our option is cancelled. In the Hamilton Crossing case, if I had done my job right instead of screwing up, before the owner would have been allowed to sell his property for $17,000, he would have first had to offer it to us for that price…and believe me, we would have exercised that option in a heart beat! Going back to when we first sold this property, why didn’t we do what we
normally do and get a First Right of Refusal Option? Simply put: I didn’t want to take the time to write one up. Can you believe that? This mistake cost Kim and me tens of thousands of dollars – and Kim is none too happy with me! Now do you see why I was an idiot? There are so many ways for real estate investors to make money – don’t limit yourself to just one. Keep learning new creative ways to structure your deals! I will be sharing a few options and how to use Canvas Cards and T Bar offer pictured below among other things at my workshop on Saturday June 13th here at MAREI. I hope you can join me, I've learned a lot more in 2010 and wouldn't you rather learn from my mistakes so you can avoid them?
M A R E I
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S P O T L I G H T
Volunteer Spotlight Bret Ladewig At most MAREI Meetings, you will find Bret Ladewig solving a lot of technical problems. Coming out of the IT world he has a lot of knowledge to help us with screens and sound at the MAREI Meeting. He has solved lack of internet when the hotel's system failed and stepped up to help us keep our meetings and workshops going when we transitioned our meetings to Zoom. He has also been very connected across many of the real estate groups here in the greater Kansas City Metro area all the way to Warrensburg Missouri where he hosted before March a real estate investor group that met monthly. As a Kansas City Native, Bret transitioned to real estate after 23 years in IT to be semi retired and living on his rental cash flow. Day to day will find Bret at one of his properties or helping a buyer and seller in residential or commercial. Bret is a licensed Realtor with Keller Williams in both Kansas and Missouri. To connect with him reach out via email to brladewig@gmail.com or call (573) 776 6371. with If you see Bret at MAREI be sure to thank him for all his help.
See Bret's Susquehanna case study below!
B R E L A D
I N V E S T M E N T S
L L C
Susquehanna
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B E F O R E
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The Deal: Rehab Flip. A 4 bed, 4 bath, 1 ½ story
home in NE Independence. The Condition: Dated 1970s décor that was dingy
from cigarette smoke, dogs and kids for over 50 years. Plywood paneling. Pendulum style hanging lights. Dark wood everywhere. Pony walls with decorative posts. Carpet & linoleum that was 3 layers deep. Corroded faucets, leaking showers. Chewed up trim & outlets. Dangerous 100 amp electric panel with unsafe homeowner added wiring. Double Taps – look it up. Greasy Garage, Mostly unfinished basement with framed in mother-in-law quarters. Three kinds of water supply lines. Backed up bath. Objective: Bring the house into a modern decor with a
neutral but trending style. From researching the trends, I selected whites, grays and blacks throughout the house in a two-tone effect for contrast. Changed all floors to wood floors except for 2 upstairs bedrooms. Large 12x24 tiles in baths as shower surround, bath floors and entry. Granite counters in kitchen and baths. New white, shaker style cabinets in kitchen with a black and white tile back splash matching the counter tops. Added a coffee/wine bar to the kitchen for extra cabinet space. Installed new, stainless appliances. Framed picture mirrors in bathrooms, another trend. painted all trims white. Fixed and cleaned up mother-in-law quarter and bath. Replaced the iron stair railing with modern, added wood stair treads to match floors. New garage doors. Outside we cleaned things up. Roof & Foundation good. The Numbers: Purchased at $180,000 using a
conventional mortgage. Using three different contractors and two real estate agents, I figured an ARV of $215,000. I used a hard money lender to finance the deal. After going through five Contractors and ending up taking on some of the work myself, I put $43,000 additional and about four months of sweat equity into the rehab. A large part of the cost was due to the time it was taking to find good contractors and delays each of them caused. I listed the property at $235,000. Admittedly, I did go a little over the top on some of the new elements. In the end, I’ll make back enough to cover the financing costs, but will not profit from the deal. Would I do it again? You bet. Just with a tighter plan.
K C R A R
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H E A R T L A N D
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T H E
M A R K E T
Current as of May 7, 2020. Report provided by the Kansas City Regional Association of REALTORSŽ. All data from Heartland Multiple Listing Service. Report Š 2020 ShowingTime. |
April Market Update While the stock market recovered significantly in March, the effects of COVID19 to the economy continue to build. In just the last four weeks, more than 20 million people filed initial unemployment claims according to the United States Department of Labor, fueled by stay at home orders and a slowdown of economic activity across the country. More than 30 million people have become unemployed since COVID-19 has become widespread in the U.S. In the face of these challenging times, real estate activity in April slowed significantly.
Closed Sales decreased 7.3 percent for existing homes but increased 3.0 percent for new homes. Pending Sales decreased 19.3 percent for existing homes and 24.9 percent for new homes. Inventory decreased 31.8 percent for existing homes and 19.7 percent for new homes. The Median Sales Price was up 7.5 percent to $215,000 for existing homes and 2.8 percent to $369,925 for new omes. Days on Market decreased 20.9 percent for existing homes but increased 10.0 percent for new homes. Supply decreased 30.0 percent for existing homes and 20.6 percent for new homes.
While the effect of COVID-19 continues to vary widely across the country, it is expected that social distancing, higher unemployment, and lower overall economic activity is likely to continue to constrain real estate activity in the near term. At the same time, the industry is adapting to the current environment by conducting business using technologies such as virtual showings and e-signing to help buyers and sellers with their housing needs in the face of these challenges. See full report at www.KCRAR.com/Statistics
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M E M B E R
B E N E F I T
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T O O L S
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M A R E I
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T E A M
Build Your Team with MAREI's Business Directory M A R E I . O R G / B U S I N E S S - D I R E C T O R Y
Accountant
Attorney Rick Davis
Building Supplier
Levy Craig Guardian Accounting Services
LevyCraig.com/Rick-Davis
DeMayo Enterprises
Stephanie Parris
816-460-1819
Wholesale Cabinets
GuardianAccountingServices.com 816-535-8250
Mark Yanda
Auction Company
www.DeMayoEnterprises.net 913-980-4260
Attorney
Auction.com
Rachel Bailey
Earthwise of KC
Anderson & Associates
www.Auction.com
Windows & Doors
Julie Anderson & Jamie Walker
816-797-6875
James White
MOKSLaw.com
EarthwiseKC.com
816-931-2207
913-777-4862
See site for Free Forms
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B U S I N E S S
D I R E C T O R Y
Rugs, Rolls and Remnants
Arcana Insurance
Gateway Mortgage Group
Flooring
Insurance for Investors
Mike Leech
Jerry Ratway
NREIA.ArcanaInsurance
GatewayLoan.com/Mike-Leech
RugsRollsRemants.com
HUB.com
913-802-5015
913-593-0568
877.744.3660 Leader One Financial
Contractor
Rauber Insurance Agency
Traditional Mortgage Lending
Farmers Insurance
Alice Lund
Genesis Home Restorations
LoveIsOurPolicy.com
www.Your1Home.com
Mold Remediation
(816) 436-1016
913-488-1769
IRA - Self Directed
Lima One Capital
Terry Amerine GenesisHomeRestorations.com 913-270-0812
Hard Money
Equity Trust Company
Tracey Vinzant
Hearth Masters
TrustETC.com/NationalREIA
LimaOneCapital.com
Fireplace / Masonry
FREE Training
913-671-0040
Gene Padgitt
844-732-9404 Merchants Mortgage
ChimKC.com 816-461-3665
Lending
Mushy Money Susan Aubin
Olson Foundation Repair
Crossroads Investment
MerchantsMtg.com
Luke Olson & Peggy Stroud
Lending
303-514-08150
OlsonFoundationRepair.com
Hard Money
913-592-3300
Bekah, Brant, & Britton
North Oak Investments
KCLend.com
Hard Money
913-800-8226
Tommy Nigro
Forms
NorthOakInvestment.com EZ Landlord Forms
Flat Branch Home Loans
www.MAREI.org/Forms
Mortgage Banker
Insurance
816-249-1001
Beth Langston
REI Investor Funding
FlatBranchHomeLoans.com
Investor Lending
816-479-5841 x 1148
Charlie Fitzgerald
Agema Insurance
REIInvestorFunds.com
Fred Dickinson
913-843-8650
www.AgemaIns.com 913-543-8116
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Marketing
Office Supply
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B U S I N E S S
D I R E C T O R Y
PMI Destination Properties
Ryan Kernicky
3 Leads Per Day
Office Depot / Office Max
www.PMIDestination.com
Online Marketing Training
www.OfficeDepot.com
913-583-1515
from Investor Carrot
Discount Link & Card in
www.MAREI.org/3Leads
Member Discounts
Realtor
InvestorCarrot
Pest Control
Crown Realty
Websites
Rich Melton
Online Marketing
BedBugTraps.com
RichMelton.CrownRealty.com
www.MAREI.org/InvestorCarrot
Stop Bed Bugs
913-215-9004
Discounts for Members PatLive
Get Your Phone Answered
Screening
Properties Rent Perfect
www.MAREI.org/PatLive KCInvest
Tenant Screening Plus
PropStream
Investment Properties
Heather Johnson
Build Marketing Lists
Scott & Kim & Don Tucker
www.RentPerfect.com
& Research properties
www.KCInvest.com
877-922-2547
www.MAREI.org/PropStream
913-735-0018
Discounts www.MAREI.org/RP
REIBlackbook
Property Investors Inc.
Software
Investor Marketing Platform
Todd Franzen & Chris Hellums
Websites, CRM, Automation
MyPropertyInvestors.com
FlipperForce.com
Demo & Discount
1-800-614-7705
Rehab Analysis & Management
MAREI.org/REIBB
David Robertson
Property Manager
(816) 559-1782
Investor Marketing Platform
Home Rental Services
Title Company
Lists : Direct Mail : CRM
Paul Branton
www.MyREIPro.com/NREIA
www.Home4Rent.com
Accurate Title Company
Discount Code 66209PRO
913-627-9543
Dave Green
REIPro
AccurateTitleCo.com Odor Removal
M & M Property Pros
913-338-0100
Michael & Michele Belman OdorXIt
www.MMPropertyPros.com
Learn more about becoming a
www.MAREI.org/OdorXit
816-490-6745
Business Member at MAREI.org/
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PPP Flexibility Act Passes
Julie Anderson and Jamie Walker
1. The covered period was eight weeks has been extended to whichever is shorter 24 weeks or 12.31.2020.
resources for landlords,
3. Repayment term went from 18 payments for two years to five- year period. The repayment remains at 1% interest.
B U S I N E S S
D I R E C T O R Y
LEGAL RESOURCES
The main changes include:
2. Payroll costs requirement dropped to 60%, anything under that is not forgiven.
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have free legal updates and investors and members. Go to MOKSLaw.com/Forms
You will also find a wealth of forms to help you manage your rental property.
MOKSLAW.COM
4. Payment deferral if you use the loan and don’t do the forgiveness, is moved from six months to the date in which the lender gets the payment from the government. This means folks are not being penalized for the slowness of the Feds. 5. The timeline to restore your fulltime employee headcount went from June 30, 2020 to December 31, 2020. 6. Payment deferral including principal, interest, and fees is now extended until the lender receives payment, doing away with the original six- month period. 7. Borrows can be qualified to defer their portion of the social security tax until December 31, 2021 for the first half and December 31, 2022 for the second half. Information provided by Stephanie Parris with Guardian Accounting Servoces.
MAREI Business Members & Guests have a wealth of knowledge to share on the weekly PartnerCast hosted by John Wires and James Gregg.
MAREI.org/MAREI-PartnerCast
Virtual Happy Hour Every Thursday 5:15 to 5:45 Hosted by Rick Davis Networking. BYOB. Get the details & network KC RealEstateLaw.com/virtual-happy-hour/
